China Southern Airlines and China Eastern Airlines said they would cooperate in several areas including ground handling and operations as well as marketing and aircraft procurement.

The two domestic carriers on Tuesday signed a framework agreement to that effect but stressed that the cooperation does not involve equity investment.

The agreement came just one week after Air China's parent proposed to pay at least HK$5 a share or US$1.9 billion for a less than 30 percent stake in China Eastern. China Eastern's parent has said it may not respond to the proposal because it was incomplete and lacked legal validity.

However, China Eastern Chairman Li Fenghua was quoted as saying that the latest cooperation deal won't sway its efforts in finding a strategic partner.

Liu Shaoyong, chairman of China Southern, said the two companies have negotiated on the cooperation for more than one year.

"China Eastern may try to relieve its pressure by announcing the agreement at this time, but the cooperation won't impact its negotiations with Air China's parent," said Li Lei, an analyst of China Securities Co.

(Shanghai Daily January 24, 2008)